Reasons for The Increase in Copper Prices

Reasons for the increase in copper prices

1‌. Supply and demand relationship: 

The growth rate of global copper mine supply has slowed down, and it is expected to only increase by 2.2% in 2025. 

At the same time, China has tightened regulations on the construction of new copper smelters, further limiting the expansion of domestic copper production capacity and exacerbating the tight supply situation.

In terms of demand, the global economic recovery, infrastructure construction, and active manufacturing have driven an increase in demand for copper.

2. Geopolitics and trade situation: 

The uncertainty of geopolitical and trade situation can also affect the transportation and supply of copper, thereby affecting the balance of market supply and demand.

3. Monetary policy:

Loose monetary policy leads to a large amount of capital flowing into the market, and investors choose to invest in commodities with preservation properties such as copper, which drives their prices up.

4. Energy transition demand: 

Against the backdrop of global energy transition, the demand for copper in renewable energy industries such as new energy vehicles, solar energy, and wind energy continues to grow, providing new growth points for copper demand.

Copper price forecast

1. Institutional forecast:

Goldman Sachs predicts copper prices to be $10160 per ton by 2025.

Bank of America (BofA) predicts a copper price of $9438 per ton by 2025.

Morgan Stanley predicts copper prices to be $9500 per ton by the end of 2025.

Citigroup predicts a copper price of $8750 per ton by 2025.

Royal Bank of Canada (RBC) predicts a copper price of $8800 per ton by 2025.

Bank of Montreal (BMO) predicts copper prices to be around $8800 per ton by 2025.

Kaitou Macro predicts that copper prices will average $8000 per ton by the end of 2026 and continue to decline until 2030.

Influence factor

Global economic situation: 

The recovery or slowdown of the global economy will directly affect the demand for copper, thereby affecting copper prices.

2. Supply changes: 

New copper mining development projects, the production situation of existing mines, and policy adjustments will all affect the supply pattern, which in turn will affect copper prices.

3. Monetary Policy: 

The direction of monetary policy can also have an impact on copper prices. Loose monetary policy may push copper prices up, while tight monetary policy may have adverse effects on copper prices.